Union Budget ’14 : Takeaway for HigherEd professionals

The Union Budget was presented by Hon’ble Finance Minister Shri Arun Jaitley on 10th July 2014.

As the Indian higher education is at a critical stage with tremendous pressure on increasing GER and quality enhancement of Institutions, the sector was expecting structural reforms. However unfortunately; the budget fell short on those expectations as the new government also continued focusing on infrastructure creation than structural reforms.

Looking at the challenges Indian higher education is facing, a new strategic approach needs to be taken to overhaul the sector. The budget only talked about doing more of the same that the last government was doing. It also has been populist in nature as it attempts to please a few sections of society, specifically based on geography.

Provided with the huge mandate to this government, this budget would have clarified government’s stand on FDI in Higher Education (Foreign Education Providers’ Bill), which is eagerly awaited by, not just, the promoters of private education institutions but also by some leading foreign institutions as well.

Looking at the increasing importance and urgency for preparing Indian institutions to compete on global rankings, this would have been the most appropriate time for the government to announce an initiative on the lines of Chinese 985 (or Korean Brain 21) programs. Such initiative would have been able to rejuvenate Indian higher education system.

Here, I have presented detailed analysis on each points of the Hon’ble Minister’s budgetary speech.

Hon’ble Minister’s Budget speech:

“The country needs a large number of Centers of higher learning which are world class. I propose to set up Jai Prakash Narayan National Centre for Excellence in Humanities in Madhya Pradesh. I also intend to setup five more IITs in the Jammu, Chattisgarh, Goa, Andhra Pradesh and Kerala. Five IIMs would be setup in the States of Himachal Pradesh, Punjab, Bihar, Odisha and Maharashtra. I propose to set aside a sum of Rs 500 crore for this.”

Analysis:

This announcement is the most significant as it clarifies the government’s approach towards higher education. I feel, the government has gone completely wrong. To improve the GER the country certainly needs additional capacity but it is more important to better quality of existing education institution, urgently. When most of the newly formed IITs and IIMs are still operating from borrowed campuses and are struggling from lack of quality faculties, this budget should have focused on strengthening them rather than starting new institutions.

If the government felt the need to increase some capacity, a better initiative should have been to create a new brand in Higher Education rather than trying to leverage existing brands like IITs and IIMs.

In today’s context establishing even a single world class institution requires an investment of Rs 500 crore and it doesn’t make any sense to allocate similar budget to start 10 new institutions. The better option would have been to allocate funds, to the best management / engineering institution in these states, with the specific objective of putting them on the road map to become IITs and IIMs. Opening 5 new IIMs and IITs each in the states where it is not present currently, is certainly politically motivated and has no merit from educational stand-point.

Hon’ble Minister’s Budget speech:

“Government also proposes to ease and simplify norms to facilitate education loans for higher studies. “

Analysis:

This is right step in the right direction to improve GER. Looking at the budgetary deficits and increased capacity in the private institutions, it was almost impossible for the hon’ble minister to subsidize or control fees and push for GER increase.

However, the government must not consider such simplification at the cost of increase in NPAs. It needs to be monitored carefully as NPAs in education loans are already hovering at more than 5%.

Hon’ble Minister’s Budget speech:

“Rs 2,200 crores for Rashtriya Uchchatar Shiksha Abhiyan.”

Analysis:

It is in the continuation of existing centrally sponsored scheme. With larger allocation, it is more important to increase effectiveness and relentless focus on quality, equity and access.

Hon’ble Minister’s Budget speech:

“Film & Television Institute, Pune and Satyajit Ray Film & Television Institute, Kolkata are proposed to be accorded status of Institutes of national importance and a “National Centre for Excellence in Animation, Gaming and Special Effects will be set up.”

Analysis:

This is a real area of new initiatives in this budget. It is encouraging for the private institutions to know that government has acknowledged the importance of higher education institutions in specialized and emerging disciplines.

Hon’ble Minister’s Budget speech:

“Rs 200 crore provided to open Agriculture Universities in Andhra Pradesh and Rajasthan & Horticulture Universities in Telangana & Haryana. “

Analysis:

Ii is difficult to understand that with more than 50 existing agricultural and horticulture universities, most of them operating at lower than expected capacity utilization, the government has decided to establish 4 more such universities. As most of these universities are operating under tight budgetary constraints and produce lower quality research, this money should have been better utilized in upgrading the quality of education and research in the existing agricultural and horticultural universities. Agriculture & horticulture universities require large land bank and unfortunately, most of the budgetary allocation will go in land and basic infrastructure.

To conclude, it is important for the government and specifically, ministry of HRD to make a fine balance between new capacity generation and building globally ranked institutions. This budget creates an impression of leaning towards capacity building.